THE KATZ GROUP

 
     

Costs of Making a Purchase

Whether you are buying your first home or selling your home and moving to another, it is important that you budget for the costs associated with buying a home.

In addition to the purchase price of the home, these are some of the additional costs which may apply:

Appraisal Fee:  If you are obtaining a loan, this is one of the up-front costs you will incur during the course of your transaction. The appraisal will normally cost between $250 and $1,300. The fee is usually based upon the size of the home and complexity of the appraisal itself. For buyers obtaining a jumbo loan above $900,000, the lender might require two appraisals.

Inspections: When purchasing a home, it is very important to have the home inspected. The extent of the inspection will be determined based upon the age and general condition of the home. At the very least, you will want to hire a qualified home inspector to perform a general inspection ($350 - $1,200 depending upon the size of the home) and a termite inspection ($55 - $75). Once the general home inspector delivers the report with the results of the initial inspection, additional inspections might be required. These could include a structural inspection, a roof inspection, an HVAC inspection, an electrical inspection and/or a pool inspection.

Property Taxes:  Your property taxes are due bi-annually and are paid in arrears. Your lender will probably divide the annual sum by the 12 months of the year and add this to your monthly payment.  If you are responsible for paying them yourself, your lender may request proof that this has been done.

Survey Fee:  In many states, if you are purchasing a home that is not new, the lender may request an updated property survey.  The cost of this report will vary from $700-$1000. In  Arizona, when purchasing residential property, lenders rarely, if ever, require a survey. 

Property Insurance:  Your lender will require you to have insurance covering the replacement value, structure and contents of your home.  This is an annual charge and your lender may divide it by the 12 months of the year and collect it with your monthly mortgage payment.  On occasion a property is in a flood zone and the lender will require you to take out additional insurance.

Service Charges:  This charge is applied by the various utility companies to connect or change the services to the home.

Private Mortgage Insurance.  If you are putting down less than 20% of the purchase price of your home as a down payment, you will be required to pay private mortgage insurance ("PMI") on the portion of your loan that is over and above 80% of the value of the home.  Payments are made monthly in addition to your mortgage payment. This payment will no longer be required when the borrower's equity in the home reaches 20%. Usually, the borrower must keep track of this achievement and then notify the lender, in writing, asking for the PMI payments to cease.

Mortgage Broker's Fee or Origination Fee: The lender is entitled to charge you a fee for generating your loan. This will vary and is not an automatic charge to the borrower. Since not every lender charges this fee, it is worth shopping around. The fee does not normally exceed 1% of the loan amount.

Moving Costs:  Professional movers cost between $50 and $100 per hour for three movers (individuals). It will be 10%-20% higher during peak moving season in your area. Some moving companies offer special discount rates to clients of certain real estate brokerages (like Realty Executives).

Homeowners Associations:  Many communities have common areas and facilities and have Homeowners associations in place to manage them and also to maintain the covenants and restrictions of that community.  These associations commonly charge a monthly fee and you should be aware that this is in addition to your monthly mortgage payment. These costs vary greatly depending on the community.

Water Quality and Well Certification: If the home you are buying is serviced by a well, you should consider having the quality of the water checked and the well certified.  here may or may not be a fee for this service.

Septic Certification: If the house you're buying is on a septic system, you should have the septic tank pumped and certified.

Assessments:  If improvements have been made and homeowners have been assessed a fee, this could mean an additional monthly payment that you will be responsible for as owner of the home.

Document Preparation Fees: These fees are charged by both the title/escrow company and the lender.

Escrow Fees: This fee is traditionally split between the buyer and the seller and is based on the value of the home being purchased.

Lender’s Title Insurance Policy. The seller of the home usually pays for the basic title insurance policy on a home purchase. However, the buyer’s lender will require the borrower to take out an extended policy that usually runs about one-third of the cost of the title policy.  If the Buyer will be paying cash, the extended policy is not required.

Miscellaneous Costs: During the escrow period, there are usually additional costs charged to either or both the buyer and seller for recoding fees, delivery charges, etc.

Many of these costs are variable and it is worth shopping around.  As your real estate agent, we will inform you of the costs that will apply to your transaction and insure that your costs are kept to a minimum.